in Re Houston Progressive Radiology Associates, PLLC, Rodolfo L. Garcia, and Brandon C. Stroh

Opinion issued August 27, 2015

In The

Court of Appeals
For The

First District of Texas
————————————
NO. 01-14-00463-CV
———————————
IN RE HOUSTON PROGRESSIVE RADIOLOGY ASSOCIATES, PLLC,
RODOLFO L. GARCIA, AND BRANDON C. STROH, Relators

Original Proceeding on Petition for Writ of Mandamus

and
————————————
NO. 01-14-00467-CV
———————————
HOUSTON PROGRESSIVE RADIOLOGY ASSOCIATES, PLLC,
RODOLFO L. GARCIA, AND BRANDON C. STROH, Appellants
v.
STEPHEN B. LEE, M.D., P.A., DEAN PAUL CHAUVIN, JR., M.D., P.A.,
AND MICHAEL NGUYEN, M.D., Appellees
 On Appeal from the 80th District Court
Harris County, Texas
Trial Court Case No. 2014-12279

OPINION

Two professional associations, former members of a medical practice, sued

the practice and two doctors associated with it, alleging breaches of contract,

breach of fiduciary duty, and fraud in connection with the sale of the practice.

Another doctor employed by the practice also sued for breach of his employment

agreement. The practice and defendant-doctors filed a plea in abatement and

motion to dismiss in favor of arbitration, seeking to compel arbitration based on

employment agreements signed by the two doctors who controlled the plaintiff

professional associations. The trial court denied the defendants’ plea and motion,

and they filed both an interlocutory appeal and petition for writ of mandamus. 1

We reverse the order of the trial court refusing to compel arbitration, remand the

case to the trial court for entry of an order compelling arbitration and staying the

litigation, and deny the mandamus petition as moot.

1
The underlying case is Stephen B. Lee, MD., P.A. et al v. Rodolfo L. Garcia, et al,
cause number 2014-12279, pending in the 80th District Court of Harris County,
Texas, the Hon. Larry Weiman presiding.

2
 Background

Relationship of the parties

Two doctors, Rodolfo L. Garcia and Brandon C. Stroh, held ownership

interests in a radiology practice, Houston Progressive Radiology Associates,

PLLC. Each owned his respective interest through a professional association that

he controlled. Over time, additional members joined the practice, including

Stephen B. Lee, M.D., P.A., and Dean Paul Chauvin, M.D., P.A. These

professional associations were owned and controlled by Drs. Lee and Chauvin,

respectively. 2 Drs. Lee and Chauvin participated in the practice, but were

employees of their respective professional associations.

Another doctor, Michael Nguyen, joined the practice as an employee, rather

than as a member. Dr. Nguyen’s employment agreement gave HPRA discretion to

offer Nguyen the opportunity to become a member of HPRA:

[HPRA] shall have the option, in its sole discretion, of offering to [Dr.
Nguyen] the opportunity to purchase that number of Class A
Company Units of [HPRA] equal to the number held by an existing
member . . . and to become a member of [HPRA]. Such offer, if
made, will be conditioned upon [Dr. Nguyen] (and his . . . spouse, as
applicable) executing the Company Agreement of [HPRA] then in
effect . . . . [HPRA] shall notify [Dr. Nguyen] in writing at least
ninety (90) days prior to the end of the first year of employment,
whether or not it wishes to exercise such option and extend such an
offer to [Dr. Nguyen].

2
For clarity, we will refer to the individuals as Dr. Lee and Dr. Chauvin and to their
respective professional associations as Lee P.A. and Chauvin P.A.

3
HPRA never voted to extend such an offer to Dr. Nguyen, and, according to Dr.

Nguyen, HPRA did not timely notify him of its decision not to do so.

Drs. Lee and Chauvin withdraw from HPRA

In 2013, Drs. Lee and Chauvin withdrew their respective professional

associations from HPRA and became employees of HPRA. Drs. Lee and Chauvin

each executed two documents evidencing these transactions. The Membership

Interest Transfer and General Release agreements set forth the terms of Lee P.A.’s

and Chauvin P.A.’s respective sales of their ownership interests in HPRA to the

practice. The Physician Employment Agreements set forth the terms of Dr. Lee’s

and Dr. Chauvin’s employment with HPRA. All of these documents bear effective

dates of May 1, 2013, and all of them were drafted by Jackson Walker, L.L.P.,

counsel for HPRA.

Each of the Membership Interest Transfer and General Release agreements

required the signatory doctor to sign a Physician Employment Agreement and

refers to the transaction as a “transition from being a Member . . . to an employee.”

Specifically, each Membership Interest Transfer and General Release agreement

contains the following provisions:

WHEREAS, Employee [defined as the individual doctor] has
expressed a willingness to continue as an employee of [HPRA], under
terms reflected in that certain Physician Employment Contract of even
date herewith, . . .

....

4
 5. Employee Retention Payments. As consideration for Employee
[defined as the individual doctor] agreeing to transition from
being a Member of [HPRA] to an Employee, and to continue
providing professional services to [HPRA] . . . 3 [HPRA] agrees
to pay Employee . . . bonus payments . . . . Other than the
amounts described in Sections 1 and 5 of this Transfer
Agreement, and any amounts negotiated by the parties pursuant
to a separate Physician Employment Contract between
Employee and [HPRA], Employee is not entitled to any further
payments from [HPRA] . . . .

....

9. Exception to Release. Notwithstanding any other provision of
this Transfer Agreement, none of the parties releases any other
party from any claims or potential claims related to:

....

f. Any breach of a separately executed Employment
Agreement.

(italics added). Each transfer agreement also referred to the possibility that HPRA

would be the target of a sale or investment, clarified that the professional

association and doctor would have no interest in such a transaction, and specified

that any such transaction “would have no effect . . . on Employee’s employment

with [HPRA] pursuant to a duly executed Employment Agreement.” Each also

vacated “the non-competition, non-solicitation or related provisions of the

Company Agreement of [HPRA] . . . as it pertains to Employee” and provided that

3
The agreement signed by Dr. Lee and Lee P.A. here includes the phrase “for at
least twenty (24) [sic] months.” The agreement signed by Dr. Chauvin and
Chauvin P.A. does not contain similar language.

5
“the provisions of the Physician Employment Agreement between the parties shall

control as to those matters.”

The Physician Employment Agreements, in turn, referred to the sales

effected by the Membership Interest Transfer and General Release agreements,

providing that HPRA would pay the doctors bonuses “[i]n addition to the Salary,

as consideration for Employee agreeing to transition from being a Member of

[HPRA] to an Employee . . . .” Each employment agreement also provides that if

it terminates for certain enumerated reasons, “any additional employee retention

payments otherwise due under this Agreement and that certain Membership

Interest Transfer and General Release, of event date herewith, will be forfeited.”

Most significantly for this appeal, the Physician Employment Agreements

signed by Drs. Lee and Chauvin contain an arbitration provision in which the

doctors agreed to submit to binding arbitration “any dispute, controversy or claim,

whether based on contract, tort, statute, discrimination, or otherwise, relating to,

arising from, or connected in any manner to this Agreement, or to the alleged

breach of this Agreement, or arising out of or relating to Employee’s employment,

termination of employment, or non-compete.”

The sale of HPRA and commencement of litigation

On May 13, 2013, HPRA executed a letter of intent with a third party,

Radiology Partners, Inc., concerning Radiology Partners’ potential acquisition of

6
HPRA. HPRA and Radiology Partners terminated that letter of intent and executed

a new letter of intent in June 2013. Radiology Partners acquired HPRA in

September 2013.

In March 2014, Lee P.A. and Dr. Nguyen sued HPRA, Dr. Garcia, and Dr.

Stroh. Lee P.A. alleged that the defendants misrepresented the health of HPRA

and the existence of a third party interested in acquiring HPRA and that these

misrepresentations constituted fraud and a breach of fiduciary duty. Dr. Nguyen

alleged that he had been promised an opportunity to become a member of HPRA

but was never given such an opportunity and that the defendants’ representations to

him breached his employment contract, breached fiduciary duties, and constituted

fraud.

The defendants filed a plea in abatement and motion to dismiss in favor of

arbitration, arguing that Lee P.A.’s claims were governed by the arbitration clause

in Dr. Lee’s Physician Employment Agreement. They also argued that Dr.

Nguyen’s claims were interrelated with Lee P.A.’s claims, and therefore the trial

court should compel Dr. Nguyen to arbitrate his claims or, in the alternative, stay

Dr. Nguyen’s claims pending resolution of the arbitration against Lee P.A.

The plaintiffs later amended their petition to add Chauvin P.A. as a plaintiff.

They also added requests for declaratory judgments as to the rights of Lee P.A. and

Chauvin P.A. under HPRA’s Company Agreement and as to Lee P.A.’s rights

7
under the May 13, 2013 letter of intent. HPRA, Dr. Garcia, and Dr. Stroh

supplemented their plea in abatement and motion to dismiss to argue that new

plaintiff Chauvin P.A. should be compelled to arbitrate its claims for the same

reasons applicable to Lee P.A.

The trial court held a hearing on the plea in abatement and motion to

dismiss, at which it heard no testimony but admitted various documents into

evidence. Although it continued the hearing, the hearing never resumed. Post-

hearing, the plaintiffs amended their petition twice more, to add Jackson Walker as

a defendant and include a “petition for writ of mandamus to examine books and

records.”

The trial court denied the plea in abatement and motion to dismiss in favor

of arbitration. HPRA, Dr. Garcia, and Dr. Stroh then filed both an interlocutory

appeal and a petition for writ of mandamus in this Court, both of which challenge

the trial court’s denial of the plea in abatement. 4 HPRA, Dr. Garcia, and Dr. Stroh

also requested emergency relief in the form of a stay of trial court proceedings

pending our review of the denial of the plea in abatement. On June 27, 2014, we

4
The trial court denied the plea in abatement and motion to dismiss before Jackson
Walker was required to appear. Thus, Jackson Walker is not a party to either the
appeal or the mandamus proceeding. It did, however, submit a brief as amicus
curiae, expressing its intent to seek to compel arbitration in the trial court. See
TEX. R. APP. P. 11.

8
stayed all proceedings in the trial court, including discovery, pending further order

of this court.5

Discussion

HPRA, Dr. Garcia, and Dr. Stroh raise one issue on appeal: whether “the

trial court abuse[d] its discretion in denying [their] Plea in Abatement and Motion

to Dismiss in Favor of Arbitration, given that (1) the parties signed a valid

agreement to arbitrate and (2) Appellees’ claims fall within the scope of the

arbitration clause?”

A. Standard of Review and Substantive Law

We have jurisdiction to review an interlocutory order denying a motion to

compel arbitration, regardless of whether we must apply the Federal Arbitration

Act, Texas Arbitration Act, or both. TEX. CIV. PRAC. & REM. CODE ANN.

§§ 51.016 (West 2015) (party seeking to compel arbitration “[i]n a matter subject

to the Federal Arbitration Act” has right to interlocutory appeal), 171.098(a)(1)

(West 2011) (party may take interlocutory appeal of order “denying an application

5
On July 22, 2014, we denied Lee P.A., Chauvin P.A., and Dr. Nguyen’s motion
for reconsideration of that order. Appellants and amicus observe that the plaintiffs
filed a “Sixth Amended Petition” on July 2, 2014, after this Court stayed all trial
court proceedings, that does not name HPRA as a defendant and that states,
“Plaintiffs assert no common law or statutory claims against HPRA.” That
document does not appear in the record, and we therefore cannot consider it.
Samara v. Samara, 52 S.W.3d 455, 456 n.1 (Tex. App.—Houston [1st Dist.] 2001,
pet. denied); Siefkas v. Siefkas, 902 S.W.2d 72, 74 (Tex. App.—El Paso 1995, no
writ). We note, however, that any pleadings filed in the trial court proceeding
without leave of this Court between the date of our order staying the case and the
date of this opinion necessarily would have violated our order.

9
to compel arbitration made under Section 171.021” of Civil Practice and Remedies

Code); see also Ellis v. Schlimmer, 337 S.W.3d 860, 862 (Tex. 2011) (citing In re

D. Wilson Constr. Co., 196 S.W.3d 774, 780 (Tex. 2006)) (“If a trial court denies a

motion to compel arbitration, appellate review may be available under both the

TAA and the FAA so long as the TAA is not preempted.”).

“We review interlocutory appeals of orders denying motions to compel

arbitration for an abuse of discretion, deferring to the trial court’s factual

determinations if they are supported by the evidence and reviewing questions of

law de novo.” Valerus Compression Servs., LP v. Austin, 417 S.W.3d 202, 207

(Tex. App.—Houston [1st Dist.] 2013, no pet.) (citing Cleveland Constr., Inc. v.

Levco Constr., Inc., 359 S.W.3d 843, 851–52 (Tex. App.—Houston [1st Dist.]

2012, pet. dism’d)).

Parties seeking to compel arbitration must establish (1) the existence of a

valid, enforceable arbitration agreement and (2) that the claims asserted fall within

the scope of that agreement. Valerus Compression Servs., 417 S.W.3d at 207; In

re Provine, 312 S.W.3d 824, 828–29 (Tex. App.—Houston [1st Dist.] 2009, orig.

proceeding). The existence of a valid arbitration agreement is a legal question. In

re D. Wilson Constr., 196 S.W.3d at 781; Valerus Compression Servs., 417 S.W.3d

at 208. In interpreting an agreement to arbitrate, we apply ordinary contract

10
principles. J.M. Davidson, Inc. v. Webster, 128 S.W.3d 223, 227 (Tex. 2003);

Valerus Compression Servs., 417 S.W.3d at 208.

“Once an agreement is established, a court should not deny arbitration unless

it can be said with positive assurance that an arbitration clause is not susceptible of

an interpretation which would cover the dispute at issue.” In re D. Wilson Constr.,

196 S.W.3d at 783 (emphasis original) (internal quotation marks omitted) (quoting

Prudential Sec. Inc. v. Marshall, 909 S.W.2d 896, 899 (Tex. 1995) (per curiam)

(orig. proceeding)). “Further, courts should resolve any doubts as to the

agreement’s scope, waiver, and other issues unrelated to its validity in favor of

arbitration.” Ellis, 337 S.W.3d at 862.

“[W]here the parties include a broad arbitration provision in an agreement

that is ‘essential’ to the overall transaction, [courts] presume that they intended the

[arbitration] clause to reach all aspects of the transaction—including those aspects

governed by other contemporaneously executed agreements that are part of the

same transaction.” Pers. Sec. & Safety Sys. Inc. v. Motorola Inc., 297 F.3d 388,

394–95 (5th Cir. 2002); see also Kirby Highland Lakes Surgery Ctr. v. Kirby, 183

S.W.3d 897, 900–01 (Tex. App.—Dallas 2006, orig. proceeding) (citing Pers.

Sec.).

11
B. Analysis

Claims of Lee P.A. and Chauvin P.A.

HPRA, Dr. Garcia, and Dr. Stroh, as the parties seeking to compel

arbitration, bore the burden to demonstrate (1) the existence of a valid and

enforceable arbitration agreement and (2) that the claims asserted against them fall

within the scope of that agreement. See Rachal v. Reitz, 403 S.W.3d 840, 843

(Tex. 2013); In re Provine, 312 S.W.3d at 828–29. They argue that the arbitration

provisions in the Physician Employment Agreements of Dr. Lee and Dr. Chauvin,

who are not parties to the suit, are enforceable against the plaintiff entities, Lee

P.A. and Chauvin P.A., respectively, and cover the claims that Lee P.A. and

Chauvin P.A. have asserted in this lawsuit.

Lee P.A. and Chauvin P.A. respond that the arbitration provisions in the

Physician Employment Agreements of Drs. Lee and Chauvin are inapplicable

because (1) Lee P.A. and Chauvin P.A. are not signatories to the Physician

Employment Agreements; (2) their claims relate not to the Physician Employment

Agreements but rather to the Company Agreement and thus fall outside the scope

of the arbitration provisions; and (3) the Membership Interest Transfer agreements

and employment agreements should not be construed together.

12
 The transfer and employment agreements must be construed together

“[W]here the parties include a broad arbitration provision in an agreement

that is ‘essential’ to the overall transaction, we will presume that they intended the

clause to reach all aspects of the transaction—including those aspects governed by

other contemporaneously executed agreements that are part of the same

transaction.” Kirby Highland Lakes Surgery Ctr., 183 S.W.3d at 900–01 (quoting

Pers. Sec. & Safety Sys., 297 F.3d at 394-95). Thus, if the Membership Interest

Transfer agreements and Physician Employment Agreements were part of each

doctor’s overall transaction and the latter are essential to those transactions, then

we will presume that the arbitration provisions reach all disputes touching on the

transfer agreements.

“The general rule is that separate instruments or contracts executed at the

same time, for the same purpose, and in the course of the same transaction are to

be considered as one instrument, and are to be read and construed together.” Jones

v. Kelley, 614 S.W.2d 95, 98 (Tex. 1981); see also Harris v. Rowe, 593 S.W.2d

303, 306 (Tex. 1979) (“Separate instruments contemporaneously executed as a part

of the same transaction and relating to the same subject matter may be construed

together as a single instrument.”).

HPRA, Dr. Garcia, and Dr. Stroh urge us to apply this general rule and

construe each set of transfer and employment agreements as a single transaction.

13
Lee P.A. and Chauvin P.A. urge us to reject this application of the general rule and

treat these documents as four separate transactions because (1) they did not sign

the employment agreements, (2) neither employment agreement is essential to the

transaction consummated by the corresponding transfer agreement, and (3) the

parties’ expressed intent demonstrates that the agreements are to be construed

separately.

We agree with HPRA, Dr. Garcia, and Dr. Stroh that the transfer and

employment agreements must be construed together. Each of the employment

agreements refers to the corresponding transfer agreements, and vice versa. In

addition, each of the four agreements specifies that HPRA was to make certain

payments “[a]s consideration for Employee agreeing to transition from being a

Member of [HPRA] to an Employee, and to continue providing professional

services to [HPRA].” 6 The transitions in question were effected by the transfer

agreements. That the employment agreements refer to the corresponding transfers

and provide for payments to be made “as consideration” for them can only mean

that the employment agreements were part of the transfers. Moreover, each

transfer agreement states in its recitals that the individual doctor executing the

6
The employment agreements use this language, including the capitalized term
“Member,” although “Member” is not defined in those documents. If divorced
from the contemporaneously-executed transfer agreements, these provisions would
be meaningless. We must “strive to give meaning to each provision” of all four
contracts. Lenape Res. Corp. v. Tenn. Gas Pipeline Co., 925 S.W.2d 565, 574
(Tex. 1996).

14
agreement had agreed to enter into a separate, contemporaneous, employment

agreement. And each transfer agreement also specifies how HPRA’s Company

Agreement, the transfer agreement, and the employment agreement are to be

construed together to determine the parties’ rights and obligations. Thus, these

separate instruments were “contemporaneously executed as a part of the same

transaction” and “relat[e] to the same subject matter.” See Harris, 593 S.W.2d at

306.

Lee P.A. and Chauvin P.A. argue that they should not be bound by the

arbitration provisions because they are not parties to the Physician Employment

Agreements where they are found. It is well-settled that “instruments may be

construed together or treated as one contract even though they are not between the

same parties.” Jones, 614 S.W.2d at 98; Miles v. Martin, 321 S.W.2d 62, 66 (Tex.

1959); Estate of Todd v. Int’l Bank of Commerce, No. 01-12-00742-CV, 2013 WL

1694937, at *5 (Tex. App.—Houston [1st Dist.] Apr. 18, 2013, pet. denied) (mem.

op.). The overall transactions are described in each document as an “Employee

agreeing to transition from being a Member of [HPRA] to an Employee.” The

transfer agreements require execution of the employment agreements, and the

reverse is similarly true. Both the transfer and employment agreements are

therefore “essential” to accomplishing these transitions. See Jones, 614 S.W.2d at

98; Kirby Highland Lakes Surgery Ctr., 183 S.W.3d at 900–01. We conclude that

15
the Lee agreements must be construed together and that the Chauvin agreements

must be construed together. See Jones, 614 S.W.2d at 98; Kirby Highland Lakes

Surgery Ctr., 183 S.W.3d at 900–01.

Lee P.A. and Chauvin P.A. also argue that the employment agreements were

not “essential” to the transfer of the professional associations’ membership

interests. The transfer agreements expressly provide for the doctors becoming

employees and include consideration for those transitions. They required the

parties to enter into employment agreements of the same date as the transfer

agreements. Lee P.A. and Chauvin P.A. argue that “[t]he Membership Interest

Transfer agreement and employment agreements were separate, governed different

obligations between the parties, and could be fulfilled (or for that matter, breached)

independently of one another.” But the many terms in the transfer agreements that

refer to the parties’ obligations to enter and comply with the employment

agreements necessarily require us to refer to the latter. Similarly, the termination

provisions of the employment agreements purporting to govern payment of money

under the transfer agreements require reference to the transfer agreements. It

would be impossible to give these provisions meaning, unless the agreements are

understood together.

Finally, Lee P.A. and Chauvin P.A. argue that the “entire agreement”

provisions in the employment agreements indicate that the Physician Employment

16
Agreements must be construed separately from the transfer agreements. As

support, they rely on I.D.E.A. Corp. v. WC & R Interests, Inc., 545 F. Supp. 2d 600

(W.D. Tex. 2008) and In re Sino Swearingen Aircraft Corp., No. 05-03-01618-CV,

2004 WL 1193960 (Tex. App.—Dallas June 1, 2004, no pet.) (mem. op.).

In I.D.E.A. Corp., the federal district court for the Western District of Texas

held, “An entire agreement clause demonstrates that the parties did not intend for

an arbitration provision contained in the same agreement to apply to claims arising

under a separate agreement.” 545 F. Supp. 2d at 607. But the district court

premised its holding on the facts that the documents in that case did not

incorporate each other, did not refer to each other, and were executed months

apart. Id. at 607–08. Here, by contrast, the agreements expressly refer to each

other and were executed contemporaneously as part of a single transaction for each

doctor and his respective professional association. The holding of I.D.E.A. Corp.

is therefore distinguishable.

In re Sino Swearingen Aircraft Corp. is also distinguishable. That case

involved a narrow arbitration provision in which the parties agreed to arbitrate only

disputes “arising out of this Agreement” and defined “Agreement” to include only

one document. 2004 WL 1193960, at *2. The parties seeking to avoid arbitration

argued that the use of an “entire agreement” provision indicated that the parties’

various agreements could not be construed together. Id. The court of appeals,

17
however, did not explicitly accept or reject that argument. Instead, it held that the

claims themselves arose out of only one or the other of the agreements in question,

not both, and “[t]he parties provided for arbitration of claims arising out of the

termination of only one of the agreements.” Id. at *3. It concluded that the

arbitration clause in one agreement “does not encompass the parties’ dispute

under” other agreements. Id. By contrast, the parties to this case agreed to a broad

provision to arbitrate disputes “relating to, arising from, or connected in any

manner to this Agreement, or to the alleged breach of this Agreement, or arising

out of or relating to Employee’s employment, termination of employment, or non-

compete.”

The employment agreements cannot be construed without reference to the

transfer agreements, which they explicitly reference in both terms governing

consideration and terms governing termination. We therefore cannot say with

“positive assurance” that this broad language was not intended to cover disputes

relating to the transfer agreements executed as part of the same transactions. See

In re D. Wilson Constr., 196 S.W.3d at 783. Rather, because the Physician

Employment Agreements were “essential” to the transactions in which Lee P.A.

and Chauvin P.A. participated—the sale of their respective interests in HPRA—we

presume that the arbitration provisions therein were intended to reach the entire

transactions. See Jones, 614 S.W.2d at 98; Kirby Highland Lakes Surgery Ctr.,

18
183 S.W.3d at 900–01. Indeed, each doctor’s Physician Employment agreement

and transfer agreement were “executed at the same time, for the same purpose, and

in the course of the same transaction.” See Jones, 614 S.W.2d at 98; Miles, 321

S.W.2d at 65; Estate of Todd, 2013 WL 1694937, at *5. Consequently, they may

be “construed together or treated as one contract even though they are not between

the same parties.” See Jones, 614 S.W.2d at 98; Miles, 321 S.W.2d at 66; Estate of

Todd, 2013 WL 1694937, at *5. Accordingly, we hold that the documents must be

construed together and treated as a single contract regarding Dr. Lee and Lee P.A.

and a single contract regarding Dr. Chauvin and Chauvin P.A.7

7
We also note that Lee P.A. and Chauvin P.A. are bound to arbitrate their claims
for the additional reason that the Physician Employment Agreements and transfer
agreements incorporate each other by reference. E.g., Rachal v. Reitz, 403 S.W.3d
840, 846 n.5 (Tex. 2013) (recognizing incorporation by reference as one of “six
theories in contract and agency law that may bind nonsignatories to arbitration
agreements”); In re Kellogg Brown & Root, Inc., 166 S.W.3d 732, 739 (Tex.
2005) (orig. proceeding) (same); Elgohary v. Herrera, 405 S.W.3d 785, 793 (Tex.
App.—Houston [1st Dist.] 2013, no pet.) (citing In re Merrill Lynch Trust Co.,
235 S.W.3d 185, 191 & n.20 (Tex. 2007); Bridas S.A.P.I.C. v. Gov’t of Turkm.,
345 F.3d 347, 356 (5th Cir. 2003)) (same). Because the agreements explicitly and
“plainly refer” to each other, each is incorporated into the other, despite the fact
that the signatories on each were different. Jones v. Pesak Bros. Constr., Inc., 416
S.W.3d 618, 626 (Tex. App.—Houston [1st Dist.] 2013, no pet.); see also City of
Houston v. Williams, 353 S.W.3d 128, 143 n.15 (Tex. 2011) (“[W]ith any contract,
incorporation by reference is possible under contract law.”); Trico Marine Servs.,
Inc. v. Stewart & Stevenson Technical Servs., Inc., 73 S.W.3d 545, 549 (Tex.
App.—Houston [1st Dist.] 2002, orig. proceeding [mand. denied]) (holding that
arbitration is proper if contract with arbitration provision is incorporated in
disputed contract by reference).

19
 Drs. Garcia and Stroh can enforce the arbitration provisions

HPRA, Dr. Garcia, and Dr. Stroh argue that Drs. Garcia and Stroh can

enforce the arbitration provisions because they acted as agents of HPRA for

purposes of the claims against them. 8 We agree.

When a plaintiff’s claims against a defendant are “in substance” claims

against the defendant’s employer and the plaintiff has agreed to arbitrate claims

against the employer, the plaintiff must arbitrate the claims against the employee.

See In re Merrill Lynch Trust Co. FSB, 235 S.W.3d 185, 189–90 (Tex. 2007). The

claims here are “in substance” claims against HPRA. For example, each of the

professional associations alleges that all defendants failed to disclose critical

information in their respective transfer agreements. They allege that the

defendants—including Drs. Garcia and Stroh—thus committed breach of contract,

breach of fiduciary duty, fraud, and various other torts. But Drs. Garcia and Stroh

did not acquire any interest in HPRA under the transfer agreements, nor did either

of them participate in the transfer transactions in an individual capacity. Rather,

this claim can only be understood as a claim that, in their acts on behalf of HPRA,

Drs. Garcia and Stroh committed various torts and breaches of contract. “[W]hen

8
Lee P.A. and Chauvin P.A. disputed this point in their opposition to the plea in
abatement and motion to dismiss. They do not dispute it on appeal, but we must
address it nonetheless to determine whether Drs. Garcia and Stroh, neither of
whom was a party to any of the agreements at issue, can enforce the arbitration
provisions in the employment agreements.

20
an agreement between two parties clearly provides for the substance of a dispute to

be arbitrated, one cannot avoid it by simply pleading that a nonsignatory agent or

affiliate was pulling the strings.” In re Kaplan Higher Educ. Corp., 235 S.W.3d

206, 210 (Tex. 2007); see In re Merrill Lynch Trust Co., 235 S.W.3d at 188–89.

We hold that Drs. Garcia and Stroh can enforce the arbitration clauses in the

employment agreements. 9

Lee P.A.’s and Chauvin P.A.’s claims are subject to arbitration

Lee P.A. and Chauvin P.A. argue that their claims do not fall within the

scope of the employment agreements’ arbitration clauses and, further, that they

have additional claims arising under a prior agreement not subject to arbitration.

In so doing, they focus on the arbitration provisions’ references to “this

Agreement” and “Employee’s employment, termination of employment, or non-

compete.” They contend that none of their claims “touch on any employment-

related matters, thus they do not fall within the scope of the arbitration clauses at

issue.”

HPRA, Dr. Garcia, and Dr. Stroh respond by noting that the arbitration

provision language is not so narrow, encompassing all claims “relating to, arising
9
All of the allegations against defendant Jackson Walker also arise out of actions
by an agent for HPRA, specifically by the practice’s attorney. As amicus, Jackson
Walker argues that our logic therefore applies equally to it: “If the Court agrees
that the claims against the doctor defendants must be arbitrated, then the claims
against [Jackson Walker] likewise belong in arbitration.” Jackson Walker,
however, is not a party to this appeal and has not yet sought to compel arbitration
in the trial court.

21
from, or connected in any manner” to the employment agreement “or relating to

Employee’s employment, termination of employment, or non-compete.” They

argue that such a broad arbitration provision compels us to presume that the parties

intended the arbitration provision to reach all aspects of the transaction governed

by the transfer and employment agreements. See Pers. Sec. & Safety Sys., 297

F.3d at 394–95; Kirby Highland Lakes Surgery Ctr., 183 S.W.3d at 900–01. We

agree.

As we have held previously, an arbitration clause using a phrase such as

“any dispute . . . relating to, arising from, or connected in any manner to this

Agreement” is broad and “embrace[s] all disputes between the parties having a

significant relationship to the contract regardless of the label attached to the

dispute.” FD Frontier Drilling (Cyprus), Ltd. v. Didmon, 438 S.W.3d 688, 695

(Tex. App.—Houston [1st Dist.] 2014, pet. denied). “If the facts alleged ‘touch

matters,’ have a ‘significant relationship’ to, are ‘inextricably enmeshed’ with, or

are ‘factually intertwined’ with the contract containing the arbitration agreement,

the claim is arbitrable.” Id. In light of such a broad arbitration agreement, a claim

is not subject to arbitration only if “the facts alleged in support of the claim stand

alone, are completely independent of the contract, and the claim could be

maintained without reference to the contract.” Id. at 695–96.

22
 Lee P.A. and Chauvin P.A.’s claims unquestionably relate to whether the

associations were fraudulently induced to enter into the transfer agreements and,

by extension, whether Drs. Lee and Chauvin were fraudulently induced to enter

into the transfer and employment agreements. Further, many of the claims in the

live petition refer to alleged representations and omissions by the defendants “on

or before May 13, 2013,” and others as late as May 14, 2013, though the transfer

and employment agreements all have effective dates of May 1, 2013. Indeed,

several of Lee P.A.’s claims turn on its allegation that it did not receive a copy of

its transfer agreement until May 14, 2013, and its theory that it therefore was still a

member of HPRA when the latter executed a letter of intent on May 13, 2013.

These claims necessarily implicate the transfer and employment agreements and

require construction of those agreements to determine the relationships between

the parties at the time of any alleged act by the defendants. We also note that Lee

P.A. and Chauvin P.A. allege in their live petition that they “relied on [the alleged]

failures to disclose” and that “Garcia and Stroh sought to squeeze Lee P.A. and

Chauvin P.A. out of HPRA by misrepresenting HPRA’s financial condition and by

misrepresenting the status of negotiations with a third-party buyer[] of HPRA.”

Lee P.A. and Chauvin P.A. argue, however, that their claims are actually

based on the Company Agreement, HPRA’s organizational document. They argue

that “these claims accrued before the employment agreements were executed by

23
the parties, and therefore are not affected by the non-retroactive arbitration clauses

contained in the subsequently executed agreements.” We disagree. On its face,

the live pleading alleges that many if not all of the misrepresentations and

omissions of which Lee P.A. and Chauvin P.A. complain occurred after May 1,

2013, the effective date of both employment agreements. Further, their claims

cannot be decided solely by reference to the Company Agreement. Indeed, some

of Lee P.A.’s claims arise explicitly from the Lee transfer agreement. Applying

the transfer and employment agreements to the claims in this case does not require

us to give them a construction allowing for retroactive application.

We cannot say with “positive assurance that [the] arbitration clause[s] [are]

not susceptible of an interpretation which would cover the dispute at issue.” See In

re D. Wilson Constr., 196 S.W.3d at 783. We therefore hold that the trial court

erred to the extent it denied arbitration on the theory that the arbitration provisions

do not cover the plaintiffs’ claims.

The defendants proved the existence of valid, enforceable arbitration

agreements and that the claims against them fall within the scope of those

agreements. Accordingly, we hold that the trial court erred in denying the plea in

abatement and motion to dismiss in favor of arbitration.

24
 Claims of Dr. Nguyen

HPRA, Dr. Garcia, and Dr. Stroh ask us to hold that Dr. Nguyen must

arbitrate his claims or, in the alternative, that Dr. Nguyen’s claims must be stayed.

Lee P.A., Chauvin P.A., and Dr. Nguyen respond that Dr. Nguyen was only an

employee of HPRA and never a member, did not participate in any transaction

containing an arbitration provision, and asserts claims that are inherently different

from those asserted by Lee P.A. and Chauvin P.A. Thus, they argue that

compelling arbitration or staying Dr. Nguyen’s claims pending resolution of the

other plaintiffs’ claims would be inappropriate.

“[A]rbitration is a matter of contract and a party cannot be required to

submit to arbitration any dispute which he has not agreed so to submit.” AT&T

Techs., Inc. v. Commc’ns Workers of Am., 475 U.S. 643, 648, 106 S. Ct. 1415,

1418 (1986) (quoting United Steelworkers of Am. v. Warrior & Gulf Nav. Co., 363

U.S. 574, 582, 80 S. Ct. 1347, 1353 (1960)). Unlike Lee P.A. and Chauvin P.A.,

Dr. Nguyen did not sign any agreement or participate in any transaction involving

an arbitration agreement. In particular, he had no involvement in the membership

transfers by which Drs. Lee and Chauvin became employees of HPRA.

Texas and federal law recognize six theories under which a court could

compel a non-signatory to arbitrate his claims. In re Merrill Lynch Trust Co., 235

S.W.3d at 191; see Bridas S.A.P.I.C. v. Gov’t of Turkm., 345 F.3d 347, 356 (5th

25
Cir. 2003); Elgohary v. Herrera, 405 S.W.3d 785, 793 (Tex. App.—Houston [1st

Dist.] 2013, no pet.). “Those theories include (1) incorporation by reference, (2)

assumption, (3) agency, (4) veil-piercing/alter ego, (5) estoppel, and (6) third-party

beneficiary.” Elgohary, 405 S.W.3d at 793 (citing Bridas, 345 F.3d at 356). None

of these theories is applicable to Dr. Nguyen’s claims, and HPRA, Dr. Garcia, and

Dr. Stroh do not argue that any of them applies. Rather, they insist that Dr.

Nguyen should be compelled to arbitrate his claims “[b]ased on the interrelated

and inseparable nature of Plaintiffs’ allegations.” That the claims are interrelated

and depend on some of the same facts, however, is not a sufficient basis for

compelling a non-signatory to arbitrate. See, e.g., Moses H. Cone Mem’l Hosp. v.

Mercury Constr. Corp., 460 U.S. 1, 19–20, 103 S. Ct. 927, 939 (1983); In re

Merrill Lynch Trust Co., 235 S.W.3d at 192–93.

HPRA, Dr. Garcia, and Dr. Stroh nevertheless argue that Dr. Nguyen’s

claims must be arbitrated because Dr. Nguyen has the same counsel as and filed

this lawsuit along with Lee P.A. and Chauvin P.A. HPRA, Dr. Garcia, and Dr.

Stroh also argue that the plaintiffs’ claims all “stem from the same operative

facts—an alleged plot by Dr. Garcia, Dr. Stroh, and HPRA to obtain all

membership interests in HPRA, to the detriment of [the plaintiffs], and then to sell

those interests to another company.” Finally, HPRA, Dr. Garcia, and Dr. Stroh

contend that Lee P.A. and Chauvin P.A., as former members of HPRA, are

26
potential defendants or at least responsible third parties to Dr. Nguyen’s claims.

These contentions may be correct, but they do not mean that Dr. Nguyen’s claims

must be arbitrated.

The record does not reflect any agreement by Dr. Nguyen to arbitrate his

claims. We therefore hold that the trial court did not err by not compelling

arbitration of Dr. Nguyen’s claims. See AT&T Techs., 475 U.S. at 648, 106 S. Ct.

at 1418.

In the alternative, HPRA, Dr. Garcia, and Dr. Stroh argue that the trial court

should have stayed the litigation pending resolution of their arbitration of the

claims by Lee P.A. and Chauvin P.A. Under the TAA, “[t]he [trial] court shall

stay a proceeding that involves an issue subject to arbitration if an order for

arbitration or an application for that order is made under this subchapter.” TEX.

CIV. PRAC. & REM. CODE ANN. § 171.025(a) (West 2011). But “[t]he stay applies

only to the issue subject to arbitration if that issue is severable from the remainder

of the proceeding.” Id. § 171.025(b) (emphasis added).

A claim is properly severable if (1) the controversy involves more
than one cause of action, (2) the severed claim is one that would be
the proper subject of a lawsuit if independently asserted, and (3) the
severed claim is not so interwoven with the remaining action that they
involve the same facts and issues.

Guar. Fed. Sav. Bank v. Horseshoe Operating Co., 793 S.W.2d 652, 658 (Tex.

1990).

27
 Similarly, under the FAA, claims of a non-signatory must be stayed if

“(1) the arbitrated and litigated disputes involve the same operative facts, (2) the

claims asserted in the arbitration and litigation are ‘inherently inseparable,’ and

(3) the litigation has a ‘critical impact’ on the arbitration.” In re Devon Energy

Corp., 332 S.W.3d 543, 548 (Tex. App.—Houston [1st Dist.] 2009, no pet.)

(quoting Waste Mgmt., Inc. v. Residuos Industriales Multiquim, S.A. de C.V., 372

F.3d 339, 343 (5th Cir. 2004)); see also 9 U.S.C. § 3 (providing for stay of

litigation pending arbitration).

Dr. Nguyen has pleaded that he has causes of action for “misrepresentations,

breach of contract, breach of fiduciary duty, knowing participation in a breach of

fiduciary duty, fraud, fraud in a stock transaction, violations of the Texas Securities

Act and promissory estoppel.” Underlying all of those claims are two critical

assertions: (1) Dr. Nguyen’s employment contract entitled him to an opportunity to

become a member of HPRA, and (2) by failing to extend such an offer on a timely

basis, HPRA, Dr. Garcia, and Dr. Stroh induced Dr. Nguyen to forgo potentially

lucrative business opportunities. Dr. Nguyen seeks up to $2,000,000 in actual

damages, exemplary damages, and “equitable relief against Defendants in the form

of an equitable accounting, profit disgorgement, equitable recessionary damages

and/or a constructive trust with respect to the benefits received by Defendants in

the sale of HPRA.” Dr. Nguyen’s claims and requests for relief arise from the

28
same facts and are inherently inseparable from Lee P.A. and Chauvin P.A.’s claims

regarding the sale of HPRA. 10

The litigation will also have a critical impact on the arbitration. Dr. Nguyen

asserts that he was entitled to a share of HPRA and that he only learned that he

would not be given an opportunity to join the practice in April 2013. In seeking to

prove the nature and value of the interest to which he claims he was entitled, he

will certainly want to introduce evidence of the sale of HPRA, including the sales

price, the history of negotiations, and the timing of those negotiations: the very fact

issues raised by Lee P.A. and Chauvin P.A. Indeed, his claims for “fraud in a

stock transaction [and] violations of the Texas Securities Act” make no sense

unless they refer to the sale of HPRA, given that Dr. Nguyen did not participate in

any stock or securities transactions involving the defendants. If Dr. Nguyen seeks

discovery related to the sale of HPRA or a recovery based in any way on that sale,

his litigation may “subvert the . . . defendants’ right to a meaningful arbitration

with [Lee P.A. and Chauvin P.A.] by deciding issues subject to the arbitration.” In

re Devon Energy Corp., 332 S.W.3d at 549. This risk is necessarily heightened by

the fact that the same counsel represents all plaintiffs and thus has an incentive to

pursue the broadest possible discovery and theories of the case in both the

10
We stress that we do not express any opinion on the merits of any of the claims or
defenses in this suit. Instead, we must focus on the relationship between the
claims and relief sought as pleaded.

29
arbitration and the trial court proceedings, in order to maximize the chances of

recovery in both proceedings.

“Our focus concerns the preservation of meaningful arbitration, not the

potential harm to the interests of a nonsignatory.” Id. at 550. Dr. Nguyen’s

litigation involves the same operative facts as those in the arbitration. As a result,

it threatens to jeopardize the integrity of the parallel arbitration. Under both the

FAA and TAA, HPRA, Dr. Garcia, and Dr. Stroh were entitled to a stay of the

litigation pending resolution of the claims in the arbitration. See 9 U.S.C. § 3;

TEX. R. CIV. P. 171.025(a); Guar. Fed. Sav. Bank, 793 S.W.2d at 658; In re Devon

Energy Corp., 332 S.W.3d at 550. We therefore hold that the trial court abused its

discretion in refusing to stay the litigation pending the result of the arbitration. See

In re Devon Energy Corp., 332 S.W.3d at 550.

30
 Conclusion

We hold that the trial court abused its discretion by denying HPRA, Dr.

Garcia, and Dr. Stroh’s plea in abatement and motion to dismiss in favor of

arbitration. We reverse and remand the case to the trial court for entry of an order

compelling arbitration of Lee P.A.’s and Chauvin P.A.’s against HPRA, Dr.

Garcia, or Dr. Stroh and staying Dr. Nguyen’s claims pending resolution of that

arbitration. We deny the petition for writ of mandamus as moot.

Rebeca Huddle
Justice

Panel consists of Justices Jennings, Higley, and Huddle.

31